Greetings. Welcome to Brainstorm Cell Therapeutics' first quarter 2021 earnings call. At this time, all participants will be in listen-only mode. A brief question- and- answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Michael Wood with LifeSci Advisors. Mr. Wood, you may begin.
Good morning. Thank you everyone for joining us. Before we begin the opening remarks, I'd like to remind listeners that this conference call contains numerous statements, descriptions, forecasts, and projections regarding Brainstorm Cell Therapeutics and its potential future business operations and performance. Statements regarding the market potential for the treatment of neurodegenerative diseases such as ALS and MS, the sufficiency of the company's existing capital resources for continuing operations in 2021 and beyond, safety and clinical effectiveness of the NurOwn technology platform, clinical trials of NurOwn and related clinical development programs, and the company's ability to develop strategic collaborations and partnerships to support the business planning efforts. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Brainstorm's control, including the risks and uncertainties described from time to time in the company's SEC filings.
The company's results may differ materially from those projected on today's call. BrainStorm undertakes no obligation to publicly update any forward-looking statements. Joining me on the call this morning will be Chaim Lebovits, President and CEO of BrainStorm, Dr. Stacy Lindborg, Executive VP and Head of Global Clinical Research, Dr. Ralph Kern, President and Chief Medical Officer, Dr. Preetam Shah, Executive VP and Chief Financial Officer. In addition, Dr. David Setboun, Executive VP and Chief Operating Officer, will also be on the call and will be available to answer questions during the Q&A session. Now I'd like to turn the call over to Mr. Lebovits. Please go ahead.
Thank you, Mike. Thanks to all listening and for joining us to discuss our first quarter financial results and corporate highlights. Sorry. On the call today, we will be discussing the current status of our ALS program, the very exciting and recently announced top-line data from our phase II progressive MS trial, our strategic plans for these programs, as well as our quarterly financial results. Starting with our ALS program, I'd first like to say that we remain confident in the strength of our data, the potential of NurOwn as a treatment for ALS, and its broad potential as a technology platform in neurodegenerative disease. In parallel to regulatory interactions, we have been in active consultation with various experts, including principal investigators, ALS physicians, statisticians, regulatory advisors as well as the patient advocacy groups in the United States, as well as in other jurisdictions.
Dr. Stacy Lindborg, our VP and Head of Global Clinical Research, will provide insight into how we are going about these interactions and gaining feedback on our program. I want to stress that we plan to take all feedback into consideration as we assess the most efficient way to enable ALS patients' access to NurOwn, including a potential BLA submission and/or other regulatory and business options. We are diligently working to define NurOwn's path forward and are gaining scientific support. We can assure you this is a top priority for us, and we intend to update the patient and investor communities as quickly as possible. We must let additional developments play out before providing a more comprehensive update. Dr. Ralph Kern, our President and Chief Medical Officer, will discuss our progressive MS program in a few minutes, but let me give you some of the highlights.
In March, we announced positive top-line data from our open label phase II trial. These data showed that the study met its primary endpoint, with NurOwn being found to be safe and well-tolerated. We also observed consistent improvements in key secondary endpoints, spanning neurologic function, cognition, and biomarkers. Collectively, these promising results further support the utility of the NurOwn technology platform in neurodegenerative disease and provide additional proof of concept for intrathecal NurOwn therapy in progressive MS. We are now in consultation with our principal investigator to align the next steps for this program, including design of a phase II-B trial and regulatory pathway. We're also in discussions with potential strategic partners.
As part of these efforts, we are also preparing scientific presentations and a peer-reviewed manuscript on our data, which will allow us to gain valuable feedback from the MS community as we work to determine the next steps in our clinical development strategy. Once this strategy is solidified, we will be sure to provide an update to both investors and the broader MS community. Now, before I hand this off to Stacy, I want to take a moment to acknowledge that all the progress that we will discuss for today has only been possible with the dedication of our patients and caregivers, together with our employees, business partners, and clinical investigators. I'm extremely grateful to all of these individuals for the critical roles they have played in successfully advancing NurOwn's clinical development.
With that, I'll now hand this call over to Stacy, our Executive Vice President, to discuss the status of our ALS program. Stacy.
Thanks, Chaim. As Chaim just previewed a few minutes ago, we remain confident in the potential of NurOwn in ALS and are currently consulting with a wide range of people, including principal investigators, ALS experts.
Statisticians, regulatory advisors, and patient advocacy groups. These discussions have provided important feedback, which has been very positive. They've also allowed us to gain new insight from our data, as well as a lot of support and encouragement from the groups that we've discussed our clinical trial data with. We now have a very mature draft of our manuscript of the study prepared, and we expect to submit for publication shortly. Throughout the writing process, we've had an excellent partnership with the study principal investigators, who are all authors. Timely publication of the manuscript will be important, as it will allow us to share our data with, and collect additional feedback from, the broader ALS community.
Given that we are still collecting feedback from experts and that our regulatory interactions need to remain confidential at this time, it would be premature for us to share more specific next steps in ALS today. However, we are very pleased with the progress we have been making behind the scenes and look forward to providing an update. I will now hand the call over to Ralph to speak about our MS program.
Thank you, Stacy. As Chaim mentioned, we recently announced positive top-line data from our open label phase II trial in progressive MS. We pursued this trial based on the growing confidence in our proprietary cellular technology platform, the well-defined unmet need in progressive MS, and our belief that repeated intrathecal administration of NurOwn has the potential to simultaneously address neuroinflammation and neurodegeneration and improve functional outcomes in progressive MS patients. The clinical trial was conducted at four leading MS centers of excellence in the U.S. and enrolled 20 progressive MS patients who had stable disease. In other words, they had not relapsed or required rescue medications within the six months prior to study enrollment. Participants in this trial received three repeated intrathecal administrations of NurOwn, each given two months apart, and were followed for 28 weeks after their first treatment.
This was a phase II clinical trial, and the primary objective was to assess the safety and tolerability of treatment. Importantly, we included multiple secondary endpoints designed to evaluate the preliminary efficacy of NurOwn in progressive MS. These included several well-validated clinical endpoints of disability and function, cerebrospinal fluid and serum biomarker analyses, and a validated patient-reported outcome to confirm improvements in walking function. To ensure a robust analysis of our data, we set pre-specified response criteria for clinical improvements in key clinical efficacy endpoints using benchmarks that are well accepted by the MS scientific community. Additionally, we were careful to enroll a patient population that was very similar to other progressive MS studies in terms of demographics, disability, and functional measures, which allowed for further comparisons.
This allowed us to make meaningful comparisons to a 48-patient matched clinical cohort from the comprehensive longitudinal investigations in MS cohort that are followed at the Brigham and Women's Hospital, also known as the CLIMB study. The key findings from our progressive MS study were as follows. First of all, the trial met its primary endpoint, as NurOwn was demonstrated to be safe and well-tolerated in progressive MS patients. Procedure-related adverse events observed in the study were similar to our experience in ALS. In terms of efficacy, our pre-specified responder analysis showed consistent improvements across all functional measures, including walking, vision, and cognition. Such improvements were notably not observed in any of the matched CLIMB patients, suggesting that they were due to the clinical benefit of NurOwn, a truly compelling finding.
We also observed consistent increase in delivered neurotrophic factors and a reduction across key inflammatory biomarkers, further confirming NurOwn's therapeutic mechanism of action. What does this mean? Collectively, these data provide proof of concept for NurOwn in progressive MS and strongly support its potential to address the intrathecal central nervous system inflammation and progressive loss of neural function that drive the relentless clinical progression of this disease. When discussing the data with our principal investigators and the patient advocacy community, we have received extremely positive feedback and a great deal of encouragement to take next steps. As was discussed earlier, we've begun collaborating with experts to design a potential phase II-B trial, and we are preparing a peer-reviewed manuscript and scientific presentations to effectively communicate our results to the broader MS community.
We will certainly take all feedback into account as we consider potential next steps, which will include regulatory review and/or discussion with potential strategic partners. We look forward to providing everyone with an update once our plans have been solidified. I'll now turn the call over to Preetam to discuss the financials.
Thank you, Ralph. It is my pleasure now to walk you through our first quarter 2021 financial performance. Research and development expenses net for the three months ended March 31, 2021, were $4.34 million, compared to $5.95 million net for the three months ended March 31, 2020.
This decrease of $1.61 million year-over-year was primarily due to decrease in expenses related to our phase III and phase II clinical trials, and a decrease in expenses in connection with stock-based compensation, materials, travel, rent, and other activities. The decrease in expenses was partially offset by an increase in costs related to payroll, patents, preclinical R&D activities, and consultants, and a decrease in proceeds received in connection with the treatment of patients under the hospital exemption regulatory pathway, and a decrease in grants participation by the Israel Innovation Authority, or IIA. Excluding participation from IIA and other grants and proceeds received under the hospital exemption regulatory pathway, research and development expenses decreased by $2.33 million from $7.14 million in the first quarter of 2020 to $4.81 million in the first quarter of 2021.
General and administrative expenses for the three months ended March 31, 2021, were $2.59 million, compared to $2.36 million in the three months ended March 31, 2020. This increase of $228,000 year-over-year was primarily due to increase in payroll, stock-based compensation, consultants, rent, and other costs, partially offset by a decrease in PR and travel-related expenses. Net loss for the three months ended March 31, 2021, was $6.66 million, or $0.19 per share, as compared to a net loss of $8.11 million or $0.32 per share for the three months ended March 31, 2020. Cash equivalents, including short-term bank deposits, were approximately $40 million as of March 31, 2021, compared to approximately $42 million as of December 31, 2020. Our total available funding as of March 31, 2021, was approximately $57 million.
This includes cash equivalents, and short-term bank deposits, as well as remaining non-dilutive grants, which amounts to approximately $41 million. In addition, we have approximately $16 million available to us in untapped ATM capacity. For further details on our financials, please refer to our Form 10-Q filed with the SEC today. Back to you, Operator.
Thank you. We'll now be conducting a question- and- answer session. If you'd like to ask a question, please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Once again, that's star one. Thank you. Our first question is from the line of David Bautz with Zacks Small Cap Research. Please proceed with your question.
Hey, good morning, everybody.
Good morning.
For the ALS data that we're going to be seeing in the publication, will that include any data from the expanded access program or hospital exemption programs?
No. That will not be included, David.
Okay. In looking at the MS results, Dr. Kern, I'm curious if you could talk about which of those data that you're most excited about.
Yeah. David, good morning. I think we're most excited about the overall consistency of the functional improvements. There have been MS studies in the past that have shown inconsistent changes across different endpoints. What really struck us was that we saw improvements across all functional measures, and these include walking, as measured by the Timed 25-Foot Walk, the Nine-Hole Peg Test, measuring upper extremity function. Vision, it's a test called the low-contrast letter acuity. What was most striking were the cognitive changes. There was quite a significant improvement in cognitive processing speed. These were the very striking findings, and they were I think reinforced by the consistent biomarker changes that we saw in this study between neuroprotective and neuroinflammatory biomarkers that paralleled what we saw in ALS. Very positive proof of concept study.
Okay. Lastly, in regards to the next trial for MS, I know you probably can't go into details, but typically late-stage MS trials are at least one year in length, I'm just curious how you're thinking about dosing since you're just doing three doses right now. Would you want to increase the number of doses for those patients if the trial does go for at least a year?
Yeah. It's a very good question. I think it's premature for us to give more detail because we're still in discussion with some of the experts that are giving us valuable feedback. I think the direction that you're going in is directionally correct in the sense that a longer study will be needed, and also additional doses. How many and what the interval will be is something that we're still discussing internally and also with experts. Thanks for the question.
Okay. Thank you very much.
Thank you, David. Operator, we have the Q&A that investors sent in earlier. We'd ask Mike Wood if he can read the Q&As, and we'll give the answers.
Thank you, Chaim.
We'll go back to the live. Yeah.
Thank you, Chaim. There are a number of pre-submitted questions, I'll start with this one. First of all, what are your plans for ALS going forward? Do you intend to conduct another trial?
Thank you very much. Our ultimate goal remains to secure approval for NurOwn in ALS, and we remain confident in the effectiveness and safety of NurOwn. Our current priority is to publish the full phase III data in a peer-review journal as we are also meeting with ALS experts and key opinion leaders who are not part of the trial and do not have first-hand experience with NurOwn to share the data and receive their feedback. We are receiving invaluable insight and positive feedback from these world-renowned ALS experts. There's widespread agreement among the experts we have spoken with that the data support advancing NurOwn as a treatment for ALS. To sum this up, it's not a question if, it's a question when and how. Next question please, Mike.
Will you be submitting a drug approval submission for NurOwn in ALS in Health Canada or the EU? As a follow-up to that, are you considering bypassing the FDA and getting approval for NurOwn in other territories?
While we're not considering to bypass, we are considering other geographies, while we're still assessing our exact strategy with the FDA. Next.
The next question. Can you comment on the public statement that the FDA released about NurOwn? The statement was somewhat unusual.
Stacy.
Yes. It was unusual for the FDA to issue such a statement. The FDA did not reach out to us prior to issuing the statement but did prioritize a call with us quickly following its issuance. What we learned is that they were not operating out of concern based on actions of BrainStorm. I guess to round it back, as FDA indicated in their preliminary assessment, while not recommended by them, we're not precluded from submitting a BLA.
Thank you very much. Mike.
Next question. Does BrainStorm intend to submit a BLA to the FDA following phase III of NurOwn? If not, RADICAVA was granted FDA approval without very exceptional clinical data. What is the downside of submitting a BLA at this point?
Stacy will take this one, please.
Sure. As a company, BrainStorm is continuing to weigh the option of a BLA submission. Our current priorities, as we've stated, are publishing the phase III data in a peer-review journal and meeting with ALS experts and key opinion leaders. It's important, we're prioritizing people that are outside of the clinical trial ecosystem to share our data with and to receive feedback. Our goal is to secure an approval for NurOwn as a treatment for ALS. If after consulting with key opinion leaders and after the data is published, if we determine that the most rapid way to achieve this goal is to submit a BLA following our phase III data, we will pursue this path. In other words, there may not be a downside to submitting a BLA at this time, and that's exactly what we're working to determine.
Next question, please, Mike.
Can you talk about the revenue-generating opportunity for NurOwn in the international ALS marketplace?
David, you want to take this one?
Sure. There is a lot of patients suffering from ALS outside of the U.S., and this is a critical unmet need in the U.S. and beyond. There is a very strong international business opportunity. As a reminder, outside of the U.S., the ALS worldwide prevalence is higher than 400,000 patients.
Thank you. Next question, please.
The next question is regarding the patient advocacy group, I AM ALS. I AM ALS is calling for a congressional hearing on ALS. How are you working with them, and what is your strategy here?
Thank you. We are fully engaged working with the ALS advocacy community, including I AM ALS. I AM ALS did advise us of this meeting. There's a growing awareness of the critical unmet need in ALS and limited treatment options. We're certainly open to discussing practical options across a range of stakeholders, including government. Next question, please.
Next question. It relates to hospital exemption. This investor has said they've heard that there are patients being treated in Israel on open label. How many patients? What were the results? Why doesn't the company share them with the public? Is this facility still open for treatment?
Yeah. Very good question. Thank you. This will probably answer part of what David asked before. Stacy, you want to take this one?
Sure. At the present time, we don't have additional outcomes to share from this trial. It's really for a couple of reasons. First, COVID-19 travel restrictions have severely limited this program and the ability to continue to collect the longitudinal data in the program. Second, the question references that this is an open label study. While data can be accessed during the conduct of the study, many of the established clinical endpoints in ALS are subjective in nature, and thus, it's an industry practice to not discuss ongoing trials to avoid bringing bias into the trial. Referencing back to the question that David asked at the beginning about this study, our publication from our phase III study will be a readout of and a publication of that trial, and therefore won't contain additional data from other studies.
Thanks, Stacy. Very helpful. Next question, please.
The next question is regarding the exosome platform. Does treating a patient's cells with NurOwn enhance the ability of the exosomes to fight disease? Or is it the quality of the message that exosomes are carrying that provides the needed support for NurOwn to slow down disease progression?
Thank you. Ralph?
Sure. It's our belief that similar to NurOwn, the potential therapeutic benefits of exosomes is mediated through the delivery of biological molecules that reduce inflammation, provide tissue support, and promote repair. To answer this question directly, it's the quality of the message or cargo that exosomes are carrying that determine the outcome. Exosomes also provide a practical option that allows for easier formulation, logistics, and may have better tissue delivery. In other ways, they're also potentially less immunogenic, supporting what we believe is a very high-potential, off-the-shelf allogeneic cell source treatment option.
Thank you very much. Next question.
What are the plans to partner NurOwn in ALS? Are you currently speaking with partners or close to for NurOwn?
Thank you. David?
We are open to collaborate. In fact, we're in continued discussion with various partners for all the different programs in our portfolio. For NurOwn in ALS indication as well as progressive MS. We are, as well, speaking with partners interested in our exosome platform and ARDS indication. We are actively engaged in discussion, but for confidentiality reasons, we cannot provide details at this point.
Thank you.
We have one remaining question, and this is on the Alzheimer's program. At this point, why not start a clinical trial for Alzheimer's disease? Could NurOwn potentially help or improve a person's condition with Alzheimer's?
David.
We are in the process of finalizing regulatory discussion regarding the Alzheimer's clinical trial. The rationale for NurOwn in Alzheimer's disease is strong, given the evidence that neuroinflammation plays an important role, that specific neurotrophic support system in Alzheimer's disease are deficient, and that specific cargo delivered by NurOwn, including certain neurotrophic factors and microRNA molecules, are known to have a beneficial effect in Alzheimer's preclinical models.
Thank you very much. Ralph, you want to elaborate a little bit on this?
Yeah. I can just say that there's a tremendous interest in using cellular therapy to modify the environment of Alzheimer's disease, which includes, obviously, inflammation. I think our recent findings in MS, the cognitive changes in our progressive MS patients, may be an important indicator that Alzheimer's is a very good next indication. That's what I'd like to add today.
Thank you very much, Ralph. Rob, you can now reopen for a few more questions from the audience.
Thank you. The next question is from the line of Neil Farkas with Maxim Group.
I think it's Jason McCarthy.
Jason, good morning.
Yeah. Maybe my name's Neil, too. I don't know. That's very bizarre they came up that way. Good morning. Just a couple of questions. First, on ALS. I think this question is geared towards Stacy. I'm calling on your experience with Biogen. How do you think about the upcoming PDUFA for aducanumab in Alzheimer's? It's completely unrelated, obviously, to what you're doing in ALS here. The unmet need, there's a parallel there. The FDA may look at a drug like that as it might have missed in its trial. It did something good and it's safe. Alzheimer's needs something. Can you look at NurOwn and ALS through a similar lens, where it's definitely doing something to the good for these patients? It may have missed on its primary in the phase III trial. There's something there.
Would regulators maybe look at it like it seems like they're looking at aducanumab.
Well, that was a good and tricky question, but Stacy, I'll let you do that.
Yeah. I'm happy to take a stab at it.
I'm not going to hold you to anything. I'm just curious as how do you abstractly think about how you position NurOwn now?
Oh, totally understood. Sure.
Yeah. I guess what I would say is there are a lot of similarities like you're pointing out, and there are also a lot of things that are quite different, including we're going through a different center of the FDA and obviously very different diseases. I think what you're describing really is at the heart of what every biotech or pharmaceutical company is seeking in their research. We're here to produce meaningful medicines for patients, and trials sometimes result with a primary endpoint that is missed. The job that we have been working to do and really even information we've already shared in the public domain is precisely we have been working to understand what have we learned and what can we conclude about NurOwn. We believe we've gained key insights.
We've reached the conclusion, which we've shared repeatedly, even today, that we believe strongly in the efficacy of NurOwn. Back to the similarities, I think that much like Biogen had to do, we have been forced with the results of this trial and the need to look very objectively and transparently at our data. To share that data also very transparently with regulators and with ALS experts, advocacy groups, to seek input that is removed from the company, then to put forward the stuff that really serves the patient community and our investors as best we can. It's a very interesting connection and analogy, I think we're doing exactly the same thing in terms of trying to make the best next steps and put forward what we believe is the most objective and compelling evidence that speaks to NurOwn.
How do you think about cell therapy, just from its pure complexity? We published this, Chaim, which I'm sure you saw in Muscle & Nerve. They did miss a few phase III trials just on the primary, when you think about how complex cell therapies are, there's a lot of things happening that might not be captured by one snapshot of an endpoint. How do you think about NurOwn going forward into progressive MS into your phase II-B? Do you start to look at other things like MRI, white matter, free water, or brain swelling, and kind of tying that to inflammation and inflammatory biomarkers versus the typical traditional MS-like trials on maybe relapse and remitting occurrences?
Very good question, Ralph. I'll let you take this.
Yeah. Thanks, Jason. I'll try to be very brief. I think MS is a different disease in the sense that the outcome measures have a longer history and, in some ways, are more stable and easy to measure. Having said that, we believe very strongly that we can evaluate the cerebrospinal fluid as a source of biomarkers and, rather than look for new biomarkers, we believe on building upon our strength and what we've learned in the past. In other words, we're seeing very consistent biomarker changes in preclinical, in ALS, in humans, and now in progressive MS that speaks to the mechanism of action. As we have a very well-defined cellular product similar to the CAR T world, we believe that the technology is very predictable, that the fingerprint or the biomarker changes related to the cells can be measured very accurately.
That's really the strength of our conviction that the technology platform can be tested very reliably in progressive MS, and we believe in Alzheimer's as well. We're very confident in our technology and what we can measure and how we can draw legitimate conclusions from what we're doing.
Last question for cChaim. Are you planning to position BrainStorm in Alzheimer's disease strategically? Meaning, you have the aducanumab that PDUFA is coming up. You have the Alzheimer's meeting over the summer. Everybody's expecting Alzheimer's to suddenly be extremely busy. You do have your program. We didn't hear too much about today, but maybe walk us through what you're thinking for Alzheimer's and positioning BrainStorm in that space.
Well, a very good question. We have a lot to figure out in these few months. As you know, our priorities are like this. The first thing is we're submitting very soon our manuscript for peer-reviewed publication. Of course, we got to figure out what's our next step for ALS. We're getting close to that. Then we have to figure out what our next step for MS is going to be, probably another trial with ourselves or with other partners. We've got to figure that out also. Alzheimer's, we were thinking maybe to lay off, but we have some very interesting biomarker data from the ALS and MS trials, which gives us strong support we should continue for cognitive matters, which you'll see part of our, one of our publications. We're going to probably have a separate publication on the biomarker data for ALS only.
We are deciding now in the next quarter how to proceed with Alzheimer's. We're in conversation with the regulatory in Europe, and we'll see how that goes. We'll announce once we have something to announce final.
Great. Thank you all for taking the questions.
Sure. Thank you very much. Operator, any more questions? We have time for one or two more.
Question at this time, you may press star one from your telephone keypad. We'll pause a moment to assemble a queue. Who is going to star one to ask a question at this time? Thank you. Thank you. At this time, I will hand this floor back to management for any additional remarks.
No, thank you very much. Again, I want to thank everyone for being with us on this call this morning. Keep up with the faith we all have that this is going to come to an approval one day. Thank you very much.
Thank you and everyone joining us today. This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.